Occidental's $8 billion perfect storm shows pressure on U.S. oil industry
Occidental Petroleum, a huge U.S.-based oil producer, posted an $8.35 billion second-quarter loss Monday afternoon as it took huge write-downs on its asset values.
Why it matters: The whole industry is under pressure, but Occidental's problems are compounded by the additional debt it assumed when it beat out Chevron to acquire Anardarko in 2019.
By the numbers: The Houston-based company announced a $6.6 billion write-down, including a $4.3 billion hit to the value of its U.S. onshore acreage
- While multiple companies are taking multibillion dollar write-downs amid forecasts of continued weak prices and demand, Bloomberg notes that Occidental's is among the largest relative to its size.
What they're saying: "We remain concerned about the company's high debt load and ability to generate cash flow in a prolonged low oil price environment," Jennifer Rowland, an analyst with Edward Jones, writes in a note.
Yes, but: The company touted its various steps to weather the storm and manage debt, including an over 50% cut to its 2020 capital budget down to the $2.4 billion to $2.6 billion range and over $2 billion in asset sales.
- “We continue to make progress on our debt structure and have significantly exceeded our cost savings targets while delivering operational excellence across our business," CEO Vicki Hollub said in a statement.